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Grupo Hotelero Urvasco SA v Carey Value Added SL [2013] EWHC 1732 (Comm) - 24/06/13


Unsuccessful claimant in a construction dispute sought an issue-based order and costs for the adjournment of an earlier trial date. In the alternative, it sought a percentage deduction of the other party's recoverable costs.

Held: Where the court departs from the general rule that the unsuccessful party pays the costs of the successful party, it should favour a percentage over an issue-based order, unless significant costs can be discretely attributed to a distinct issue. Whether a percentage deduction is appropriate depends on the particular facts of the case and there is no automatic rule requiring reduction of a successful party's costs if it loses on one or more issue (per HLB Kidsons v Lloyd's Underwriters [2007] EWHC 2699 (Com)).

The amended rule as to payment on account of costs (CPR 44.2(8)) creates a presumption in favour of such an order. The underlying principle remains that the successful party is entitled to payment and should not be kept out of costs. However, the order must do justice between both parties and the court should adopt a conservative approach.

In the present case, an issue-based order was not justified: it was not practicable for the costs judge to make an assessment under an issue-based order in such a complex case with substantially overlapping issues. Nor were costs for the adjournment justified as they constituted costs in the cause. Although the successful party was in principle entitled to its costs, it's failure to make good its cause on a substantial issue justified a deduction of 25 per cent. The correct approach to payment on account was to proceed on the basis that the successful party was likely to recover considerably less than the costs claimed. Allowing for the 25 per cent proportionate reduction, it was reasonable for 50 per cent to be paid on account.